Template-Type: ReDIF-Paper 1.0 Author-Name: Cayetano W. Paderanga, Jr. Author-Name-First: Cayetano Author-Name-Last: Paderanga, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: The Macroeconomic Impact of Remittances in the Philippines Abstract: Over the past twenty- five years, policy changes in the Philippines and global trends leading to market and financial integration have unleashed forces that are changing the country’s economic structure. One of the most important effects is the increasing importance of overseas remittances to the Philippines. This paper looks at the macroeconomic and sectoral impact of remittances and how it has affected the country’s ability to manage its finances. What are the dilemmas posed by robust remittance inflows to our policymakers? In what ways can the government harness this valuable resource? More importantly how can the government lessen its impact on rising inequality which may threaten the country’s social fabric? Length: 36 pages Creation-Date: 2009-06 Publication-Status: Published as UPSE Discussion Paper No. DP 2009-03, June 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/viewFile/14/11 File-Format: Application/pdf Number: 200903 Handle: RePEc:phs:dpaper:200903 Template-Type: ReDIF-Paper 1.0 Author-Name: Emmanuel S. de Dios Author-Name-First: Emmanuel Author-Name-Last: de Dios Author-Email: esdedios@gmail.com Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Smith’s Economic Morals : An Introduction Abstract: This article introduces the moral philosophy underlying Smith’s contributions to economics and emphasises the close connection between Smith’s two principal works, the Theory of moral sentiments and the Wealth of nations. Length: 15 pages Creation-Date: 2009-07 Publication-Status: Published as UPSE Discussion Paper No. 2009-04, July 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/15/12 File-Format: Application/pdf Number: 200904 Handle: RePEc:phs:dpaper:200904 Template-Type: ReDIF-Paper 1.0 Author-Name: Gerardo P. Sicat Author-Name-First: Gerardo Author-Name-Last: Sicat Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Marian Panganiban Author-Name-First: Marian Author-Name-Last: Panganiban Title: High School Background and Academic Performance Abstract: no abstract Length: 25 pages Creation-Date: 2009-08 Publication-Status: Published as UPSE Discussion Paper No. 2009-05, Agust 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/18/13 File-Format: Application/pdf Number: 200905 Handle: RePEc:phs:dpaper:200905 Template-Type: ReDIF-Paper 1.0 Author-Name: Gerardo P. Sicat Author-Name-First: Gerardo Author-Name-Last: Sicat Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Kristine Joy S. Briones Author-Name-First: Kristine Joy Author-Name-Last: Briones Title: Determinants of Student Performance in the Introductory Economics Course in UP Abstract: no abstract Length: 22 pages Creation-Date: 2009-08 Publication-Status: Published as UPSE Discussion Paper No. 2009-06, August 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/19/14 File-Format: Application/pdf Number: 200906 Handle: RePEc:phs:dpaper:200906 Template-Type: ReDIF-Paper 1.0 Author-Name: Michael M. Alba Author-Name-First: Michael Author-Name-Last: Alba Author-Name: Jessaine Soraya C. Sugui Author-Name-First: Jessaine Soraya Author-Name-Last: Sugui Title: Motives and Giving Norms Behind Remittances : The Case of Filipino Overseas Workers and their Recipient Households Abstract: The literature has focused on motives to explain remittance behavior. But as non‐anonymous transfers, remittances are apt to be influenced by giving norms as well. We formulate an empirical specification that takes account of remittance motives involving worker‐household pairs. We find that altruism dominates the exchange motive among overseas workers who are likely to be the primary breadwinners of their recipient households. We also find that, in the subsample in which overseas workers are likely to be secondary breadwinners, (a) household labor income is an endogenous explanatory variable and (b) the error covariance of the household income and remittance selection equations is positive. A possible reason for (a) is that secondary breadwinners use household income as an imperfect signal of opportunity cost or to detect unobserved effort, i.e., moral hazard, in generating income. As for (b), we surmise that it indicates the presence of incentive‐compatible mechanisms against moral hazard. On giving norms, we find that, in samples that include overseas workers who are secondary breadwinners, remittance amounts are afflicted with negative selectivity. We present evidence that this is consistent with Filipino giving practices, in which everyone gives but in modest amounts. Length: 84 pages Creation-Date: 2009-08 Publication-Status: Published as UPSE Discussion Paper No. 2009-07, August 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/85/76 File-Format: Application/pdf Number: 200907 Classification-JEL: F24 Keywords: Remittances, remittance motives, giving norms Handle: RePEc:phs:dpaper:200907 Template-Type: ReDIF-Paper 1.0 Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Email: jjcapuno@gmail.com Author-Workplace-Name: U.P. School of Economics, Diliman, Quezon City Author-Name: Maria Melody S. Garcia Author-Name-First: Maria Melody Author-Name-Last: Garcia Author-Workplace-Name: University of Rome – Tor Vergata Title: What difference can performance ratings make? Difference-in-difference estimates of impact on local government responsiveness in the Philippines Abstract: In many countries that have decentralized, improving the accountability of local officials is increasingly emphasized to make them more responsive to their constituents’ needs. This paper provides evidence that the public announcement of performance ratings can induce local governments to become responsive. The evidence is based on application of a difference-in-difference method on a unique household-level dataset collected during the three-year pilot test of a rating system in 12 municipalities and cities in the Philippines. The results are consistent with the predictions of political agency models of incumbent behavior. Some policy guidelines on the design and implementation performance benchmarks are made. Length: 40 pages Creation-Date: 2009-09 Publication-Status: Published as UPSE Discussion Paper No. 2009-08, September 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/86/77 File-Format: Application/pdf Number: 200908 Classification-JEL: H11, H30, H77, C93 Keywords: Local governments, political agency, performance ratings, decentralization Handle: RePEc:phs:dpaper:200908 Template-Type: ReDIF-Paper 1.0 Author-Name: Rolando A. Danao Author-Name-First: Rolando Author-Name-Last: Danao Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Market Power in the Philippine Power Market Abstract: The Philippine electricity market is in a period of transition as the restructuring provisions of the Electric Power Industry Reform Act (EPIRA) of 2001 are being implemented. Under current structure, the market is highly concentrated, indicating the existence of market power. In addition, many plants, including small ones, become pivotal suppliers during peak hours, creating opportunities for the exercise of market power. Concentration in the spot market is even more pronounced as a large percentage of uncontracted capacity belongs to the Independent Power Producers (IPP) with NPC contracts whose energy outputs are under the control of a single company, the Power Sector Assets and Liabilities Management Corporation. This highlights the urgency of speeding up the dominance mitigating provision of EPIRA, namely, the appointment of independent IPP administrators who will trade the IPP outputs in the wholesale market. Length: 31 pages Creation-Date: 2009-09 Publication-Status: Published as UPSE Discussion Paper No. 2009-09, September 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/87/78 File-Format: Application/pdf Number: 200909 Handle: RePEc:phs:dpaper:200909 Template-Type: ReDIF-Paper 1.0 Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Maria Melody S. Garcia Author-Name-First: Maria Melody Author-Name-Last: Garcia Author-Workplace-Name: University of Rome - Tor Vergata Title: Earning trust with transparency : Performance ratings and trust in local officials in the Philippines Abstract: As a component of social capital, trust is deemed critical to growth and thus must be cultivated. This paper presents evidence that transparency – the public announcement of local government performance ratings– results in greater trust in local officials. The results are based on the application of propensity score matching techniques on three rounds of household survey dataset collected in a local governance project piloted in 12 local governments in the Phillippines in 2001-2003. With the public announcements, the trust may fall initially and then rise afterwards, suggesting that transparency can earn trust through time. Some policy implications are drawn. Length: 34 pages Creation-Date: 2009-09 Publication-Status: Published as UPSE Discussion Paper No. 2009-10, September 2009 Number: 200910 Handle: RePEc:phs:dpaper:200910 Template-Type: ReDIF-Paper 1.0 Author-Name: Renato E. Reside Jr. Author-Name-First: Renato Author-Name-Last: Reside Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Determinants of Overseas Filipino Worker (OFW) Remittances Abstract: This study estimates determinants of remittances to the Philippines. Remittance growth responds to real growth in the Philippines and in host countries, exchange rates, interest and deployment rates, inflation, as well as to immigration and employment policies. While most studies conclude that remittances are exclusively either driven by altruistic or self-interested motives, the evidence in this study supports remittances driven by both. The dual nature of remittances means that remittances can contribute to both consumption smoothing and business cycle amplification. Thus, remittances can be either countercyclical or procyclical depending on the shocks affecting them. Nominal price and exchange rate shocks give rise to the former response, while real shocks lead to the latter response. Length: 19 pages Creation-Date: 2009-11 Publication-Status: Published as UPSE Discussion Paper No. 2009-11, November 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/88/79 File-Format: Application/pdf Number: 200911 Handle: RePEc:phs:dpaper:200911 Template-Type: ReDIF-Paper 1.0 Author-Name: Carlos C. Bautista Author-Name-First: Carlos Author-Name-Last: Bautista Author-Workplace-Name: College of Business Administration, University of the Philippines Diliman Title: An examination of Philippine monetary policy rules Abstract: A small-scale open economy dynamic stochastic general equilibrium (DSGE) model is used to examine Philippine monetary policy. The model’s parameters are estimated using Bayesian methods. Posterior odds tests are conducted to compare models with different specifications of the policy rule. These tests indicate that the monetary authorities do not respond systematically to exchange rate movements using the policy interest rate. The study shows that output growth movements can be explained largely by technology shocks, world output movements and terms‐of‐trade changes. Policy parameter estimates show a relatively strong reaction of the monetary authorities to inflation when compared to their response to output and the exchange rate. The study shows that policy rules that give more weight to output reflect responses of monetary authorities which are different from those represented by other rules. This is the case in models with the output growth rule. In these models, a terms-of-trade deterioration that leads to currency depreciation, inflation and output contraction induces the monetary authorities to lower its policy rate to mitigate its effects on output. By contrast in other models, the policy rate is raised upon impact of the terms‐of‐trade shock to control inflation. Length: 32 pages Creation-Date: 2009-11 Publication-Status: Published as UPSE Discussion Paper No. 2009-12, November 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/13/10 File-Format: Application/pdf Number: 200912 Classification-JEL: E5, F4 Keywords: New Keynesian DSGE model, Monetary policy rules, Bayesian methods, Philippines Handle: RePEc:phs:dpaper:200912 Template-Type: ReDIF-Paper 1.0 Author-Name: Gerardo P. Sicat Author-Name-First: Gerardo Author-Name-Last: Sicat Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Labor Policies and Philippine Companies : Analysis of Survey Opinions Abstract: This paper analyzes the responses from a survey of Philippine companies concerning labor market policies, such as minimum wage setting process, hiring and firing practices, training, and holidays. These policies have gained wide acceptance as a means of protecting the welfare of workers. But one of the features of the Philippine economy is the large amount of unemployment that has persisted for a long time. Specific characteristics associated with the respondent firms help to isolate important findings in their opinions about the labor policies. Matching the responses for each policy issue against certain criteria that grouped the operating enterprises, some important conclusions are derived. The firms are segregated according to whether they are recipient or non-recipient of investment incentives; export or domestic market oriented; owned by nationals or by foreigners; young or old firms, and small or large firms by size of labor employment. The policy implications for the policy are not discussed in this paper but some conclusions appear evident. Firms that complain about certain policies could be expected to be adversely affected by them. Length: 45 pages Creation-Date: 2009-11 Publication-Status: Published as UPSE Discussion Paper No. 2009-13, November 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/11/9 File-Format: Application/pdf Number: 200913 Keywords: Labor economics, employment, labor market policies, labor regulation Handle: RePEc:phs:dpaper:200913 Template-Type: ReDIF-Paper 1.0 Author-Name: Maria Socorro Gochoco-Bautista Author-Name-First: Maria Socorro Author-Name-Last: Gochoco-Bautista Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Global Crises and Reform of the International Monetary System Abstract: History seems to have a tendency to repeat itself. The global economy goes through systemic crises. A few of these crises are catastrophic enough to seriously threaten global peace and stability. Yet it is precisely at historical junctures such as these that the inertia over reforming the international monetary system-the rules and institutions that govern international payments-is somehow overcome. World War I and the general return to the gold standard in the 1920s led to a shortage of gold from its undervaluation. This was corrected by an appreciation in its price engineered through the great deflation of the 1930s. The shock of World War II brought about the Bretton Woods Articles of Agreement. Pressure from a weak dollar in the 1970s helped create the European Monetary System. The first global crisis of the 21st century has turned out to be as severe as the Great Depression, and in some aspects, worse, though thankfully, not as long-lived. More importantly, its occurrence offers a rare opportunity to consider reforming the international monetary system yet again. Length: 23 pages Creation-Date: 2009-11 Publication-Status: Published as UPSE Discussion Paper No. 2009-14, November 2009 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/10/8 File-Format: Application/pdf Number: 200914 Handle: RePEc:phs:dpaper:200914